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Inflation expectations in the euro area: indicators, analyses and models used at Banca d’Italia

Author

Listed:
  • Sara Cecchetti

    (Bank of Italy)

  • Davide Fantino

    (Bank of Italy)

  • Alessandro Notarpietro

    (Bank of Italy)

  • Marianna Riggi

    (Bank of Italy)

  • Alex Tagliabracci

    (Bank of Italy)

  • Andrea Tiseno

    (Bank of Italy)

  • Roberta Zizza

    (Bank of Italy)

Abstract

This paper illustrates the tools used at Banca d’Italia (BI) to monitor the evolution of inflation expectations. The paper also surveys the analyses conducted at BI to assess how inflation expectations affect agents’ choices and the economy. The first part discusses the measures of inflation expectations derived from the prices of inflation-linked financial instruments and from the surveys of professional forecasters. The second part focuses on the measures of households’ and firms’ inflation expectations collected by BI, along with analyses presenting empirical evidence that expectations do indeed drive agents’ economic choices. The last part analyses the overall effect of exogenous changes of inflation expectations on the real economy, through the lens of the macroeconomic models used at BI.

Suggested Citation

  • Sara Cecchetti & Davide Fantino & Alessandro Notarpietro & Marianna Riggi & Alex Tagliabracci & Andrea Tiseno & Roberta Zizza, 2021. "Inflation expectations in the euro area: indicators, analyses and models used at Banca d’Italia," Questioni di Economia e Finanza (Occasional Papers) 612, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_612_21
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2021-0612/QEF_612_21.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Francesco Corsello & Alex Tagliabracci, 2023. "Assessing the pass-through of energy prices to inflation in the euro area," Questioni di Economia e Finanza (Occasional Papers) 745, Bank of Italy, Economic Research and International Relations Area.
    2. Marco Bottone & Cristina Conflitti & Marianna Riggi & Alex Tagliabracci, 2021. "Firms' inflation expectations and pricing strategies during Covid-19," Questioni di Economia e Finanza (Occasional Papers) 619, Bank of Italy, Economic Research and International Relations Area.
    3. Baumann, Ursel & Darracq Pariès, Matthieu & Westermann, Thomas & Riggi, Marianna & Bobeica, Elena & Meyler, Aidan & Böninghausen, Benjamin & Fritzer, Friedrich & Trezzi, Riccardo & Jonckheere, Jana & , 2021. "Inflation expectations and their role in Eurosystem forecasting," Occasional Paper Series 264, European Central Bank.
    4. Sara Cecchetti & Adriana Grasso & Marcello Pericoli, 2022. "An analysis of objective inflation expectations and inflation risk premia," Temi di discussione (Economic working papers) 1380, Bank of Italy, Economic Research and International Relations Area.
    5. Stefano Neri & Guido Bulligan & Sara Cecchetti & Francesco Corsello & Andrea Papetti & Marianna Riggi & Concetta Rondinelli & Alex Tagliabracci, 2022. "On the anchoring of inflation expectations in the euro area," Questioni di Economia e Finanza (Occasional Papers) 712, Bank of Italy, Economic Research and International Relations Area.
    6. Bottone, Marco & Tagliabracci, Alex & Zevi, Giordano, 2021. "What do Italian households know about the ECB’s target?," Economics Letters, Elsevier, vol. 207(C).
    7. Guido Bulligan & Francesco Corsello & Stefano Neri & Alex Tagliabracci, 2021. "De-anchored long-term inflation expectations in a low growth, low rate environment," Questioni di Economia e Finanza (Occasional Papers) 624, Bank of Italy, Economic Research and International Relations Area.
    8. Marco Bottone & Alex Tagliabracci & Giordano Zevi, 2021. "Inflation expectations and the ECB’s perceived inflation objective: novel evidence from firm-level data," Questioni di Economia e Finanza (Occasional Papers) 621, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    inflation expectations; anchoring; surveys;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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